Correlation Between Angel Oak and Western Asset
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Western Asset at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Angel Oak and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Angel Oak Financial and Western Asset Mortgage, you can compare the effects of market volatilities on Angel Oak and Western Asset and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Angel Oak with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Western Asset.
Diversification Opportunities for Angel Oak and Western Asset
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Angel and Western is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Western Asset Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Mortgage and Angel Oak is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Angel Oak Financial are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Mortgage has no effect on the direction of Angel Oak i.e., Angel Oak and Western Asset go up and down completely randomly.
Pair Corralation between Angel Oak and Western Asset
Given the investment horizon of 90 days Angel Oak Financial is expected to under-perform the Western Asset. But the stock apears to be less risky and, when comparing its historical volatility, Angel Oak Financial is 1.32 times less risky than Western Asset. The stock trades about -0.31 of its potential returns per unit of risk. The Western Asset Mortgage is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,195 in Western Asset Mortgage on August 24, 2024 and sell it today you would lose (1.00) from holding Western Asset Mortgage or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Financial vs. Western Asset Mortgage
Performance |
| Timeline |
| Angel Oak Financial |
| Western Asset Mortgage |
Angel Oak and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Western Asset
The main advantage of trading using opposite Angel Oak and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Western Asset can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Western Asset will offset losses from the drop in Western Asset's long position.| Angel Oak vs. Eaton Vance National | Angel Oak vs. Invesco High Income | Angel Oak vs. Blackrock Muniholdings Ny | Angel Oak vs. Nuveen California Select |
| Western Asset vs. Western Asset High | Western Asset vs. Pioneer Municipal High | Western Asset vs. Doubleline Income Solutions | Western Asset vs. Doubleline Yield Opportunities |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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